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January 22, 2014

Amazon and the Anticipatory Web

Alex Woodie

To learn more about the launch of Amazon’s “anticipatory shipping” functionality, I went to Google, which knows more about me than I care to admit. As I started typing in the words “Amazon anticipa…” Google already knew what I was looking for: “The Anticipatory Corpse,” a book from University of Notre Dame Press about the demise of dying in America.

While Google’s search algorithms may not know exactly what a user will search for next, the folks at Amazon Technologies Inc. have a patent that shows they have a pretty good idea what we’ll buy next.

In the patent for a “method and system for anticipatory shipping,” Amazon describes how it will package one or more items for eventual shipping to a destination address before that item has been ordered by the eventual recipient. The company will send the items to a distribution center close to the geographical region where it expects an order to come from. At this point, “anticipatory shipping” appears to be nothing but smart logistics and the latest iteration of “just in time” delivery that American manufacturers and distributors have been perfecting over the past decade.

But here’s where Amazon’s big data stockpile makes it interesting: Instead of waiting for a customer to place an order before shipping the item, Amazon will ship an item before the destination address has been set, and complete the shipping label while the delivery is en route. If the customer hasn’t made the expected order in time, Amazon will have that item wait at the shipper’s hub or on delivery trucks until the expected order is placed. Or, the shipment may go through anyway, even though the customer never ordered it.

Amazon’s workflow for anticipatory shipping

In its patent filing, Amazon says it’s basing the “anticipatory shipping” function (some are calling it “anticipatory shopping”) on its customers’ previous orders, product searches, wish lists, shopping-cart contents, and returns. Even how long a user hovers over an item with her cursor is being tracked and factored into the algorithm.

Amazon is taking advantage of its copious data, Sucharita Mulpuru, a Forrester Research analyst, told the Wall Street Journal, which broke the story. “Based on all the things they know about their customers, they could predict demand based on a variety of factors,” Mulpuru says.

However, there are some iffy propositions that crop up with all this consumer certainty. For instance, what does Amazon do with an item when a consumer goes off the rez and doesn’t place an order as Amazon expects them to?

According to Amazon, the items might continue to be delivered to them, but as a “gift.” “Delivering the package to the given customer as a promotional gift may be used to build goodwill,” the patent reads. The e-commerce giant also may offer the customer a discount on the item, based on the calculated return costs. It is also working on how to handle returns in the event that an anticipated (but unwanted) shipment reaches the customer.

It’s unclear whether Amazon has adopted anticipatory shipping, or how much impact the new approach will have on Amazon’s $61-billion business. There’s no doubt that big data analytics is having a huge impact on how American’s shop. And while trying to keep one step ahead of consumers may help businesses capture market share, as the aforementioned book points out, there’s a human price to be paid for relying too much on machines.

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